On Tuesday, February 2, President Obama released his budget forecasting a deficit for 2010 of $1.6 trillion for the year and $9.1 trillion from 2010 through 2020. The next day the Moody’s credit rating agency announced Obama’s budget policies were so profligate and irresponsible as to risk the credit rating of the federal government. The United State has long been recognized as the best credit risk in the world, with a rating of Aaa on Moody’s scale. Obama’s fiscal policies may “test the Aaa boundaries” according to Moody’s, as it shaded the U.S. government ratings now below those of Canada, Germany, and even France.
The source of massive budgetary shortfall is not a shortage of revenues. Obama projects federal receipts will once again be above their modern average of about 18.4 percent by 2013, rising to almost 20 percent by 2020. Near- and medium-term deficits arise because Obama saw Washington’s excess spending in recent years and decided to double down. Under his budget, federal spending rises by $1.7 trillion over 10 years.